• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The College Investor

Student Loans, Investing, Building Wealth

  • About
  • Podcast
  • Research
  • Contact
  • Save For College
      • How To Start

      • How To Save For College
      • How To Pay For College
      • What Is the Average Cost of College?
      • What Is A 529 Plan and Where to Open One in Your State
      • How Much Should You Have In A 529 Plan By Age
      • How To Use A 529 Plan For Private Elementary And High School
      • What Are Qualified Expenses For A 529 Plan (And What Doesn’t Count)?
      • The Best Brokers To Open A 529 Plan
      • Tools + Accounts

      • 529 Plans: The Ultimate College Savings Plan
      • 529 Plan Contribution Limits
      • Prepaid Tuition Plans | What To Know
      • Understanding And Using 529A ABLE Accounts
      • Using A Roth IRA To Save And Pay For College
      • FAFSA Deadlines for Financial Aid
      • CollegeBacker Review
      • Upromise Review
      • UNest Review
      • Other Options

      • Student Loan And Financial Aid Programs By State
      • The Guide To Military And VA Education Benefits
      • How To Fill Out The FAFSA
      • How To Find College Scholarships
      • The Best College Scholarship Search Websites
      • How To Find Grants To Pay For College
      • Pell Grants: What They Are And How To Qualify
      • Understanding Federal Work-Study
      • How To Use A 529 Plan If Your Child Doesn’t Go To College
  • Student Loans
      • Borrowing

        • How Student Loans Work
        • How To Apply For A Student Loan
        • Best Student Loans And Rates In January 2023
        • 10 Best Private Student Loans Of January 2023
        • Best Student Loans To Pay For Graduate School
        • Best Student Loans To Pay For Medical School
        • Parent Loans To Pay For College
        • No-Cosigner Student Loan Options
        • Guide To Income Sharing Agreements (ISAs)
        • Best International Student Loans
      • Get Out Of Debt

        • Best Student Loan Refinance Companies In January 2023
        • Best Student Loan Repayment Plans
        • Best Student Loan Refinancing Bonuses And Promotional Offers Of January 2023
        • Student Loan Forgiveness Programs (The Complete List)
        • The Full List Of Student Loan Forgiveness Programs By State
        • Public Service Loan Forgiveness (PSLF)
        • Top Student Loan Scams
        • Average Student Loan Monthly Payment
        • Average Student Loan Debt By Year
      • Reviews

        • Credible Review
        • Splash Review
        • Ascent Review
        • Citizens Bank Review
        • Commonbond Review
        • Earnest Review
        • ELFI Review
        • Laurel Road Review
        • LendKey Review
        • SoFi Review
  • Investing
      • How To Start

        • How To Start Investing in High School
        • How To Start Investing In College
        • How To Start Investing In Your Twenties For 22 – 29 Year Olds
        • How To Start Investing In Your 30s For 30 – 39 Year Olds
        • How To Start Investing With $100 Or Less
        • How To Give Kids The Gift Of Stock
        • What Is Dividend Growth Investing
        • IRA Rollover Chart
      • Tools + Accounts

        • Best Online Stock Brokers
        • The Best Traditional And Roth IRA Accounts
        • The Best Robo-Advisors
        • The Best Investing Apps
        • The Best Places to Trade Options
        • The Best Places To Open A Health Savings Account
        • The Best Solo 401k Providers
        • The Best Self-Directed IRA Providers Of 2023
        • Best Cryptocurrency Exchanges
      • Reviews

        • Vanguard Review
        • Fidelity Review 2023
        • M1 Finance Review
        • TD Ameritrade Review 2023
        • Charles Schwab Review
        • Robinhood Review
        • Webull Review
        • Betterment Review 2023
        • Wealthfront Review
  • Earn More Money
      • Extra Income

        • 20 Best Side Hustles You Can Start Earning With In 2023
        • 53 Side Hustle Ideas To Make Money Fast
        • 100 Ways To Make Money In College
        • 80 Ways To Make Money From Home In 2023
        • 5 Quick Money Making Ideas (That Take Less Than 1 Hour)
        • 10 Interesting Ways You Can Make Money Driving
        • High-Paying Side Gigs That Earn $1,000 or More Per Month
        • The 10 Best Money-Making Apps
        • Paid Surveys: Earn Money For Giving Your Opinion Online
        • 10 Crazy Ways To Make $10,000 You’ve Never Heard Of
      • Build Wealth

        • 40 Passive Income Ideas You Can Use To Build Wealth In 2023
        • 3 Ways To Make $50,000 Per Year Without Working With Passive Income
        • How To Become A Real Estate Investor With Just $500
        • 15 Best Online Business Ideas
        • Residual Income: 7 Super Smart Ways to Build It
        • The Most Common Multiple Income Streams
        • How To Become A Real Estate Mogul With Only $10,000
      • Reviews

        • Fundrise Review
        • RealtyMogul Review
        • FarmTogether Review
        • AcreTrader Review
        • Swagbucks Review
        • Survey Junkie Review
        • TopCashback Review
        • DoorDash Review
  • Personal Finance
      • Banking

        • 10 Best High Yield Savings Accounts Of January 2023
        • 10 Best Money Market Accounts Of January 2023
        • 10 Best Free Checking Accounts In January 2023
        • Best Bank CD Rates Of January 2023
        • 10 Best Business Checking Accounts In February 2023
        • Best Online Banks Of January 2023
        • Best Credit Unions Nationwide Of January 2023
        • Best College Student Checking Accounts Of January 2023
      • Insurance

        • Best Life Insurance Companies
        • Renters Insurance
        • Car Insurance
        • Pet Insurance
        • Umbrella Insurance
        • Disability Insurance
        • Tuition Insurance
        • Travel Insurance
      • Credit Tools

        • Best Budgeting Apps
        • Cash Advance Apps
        • How To Get A Free Credit Score Report
        • Best Credit Monitoring Services For 2023
        • Debt Settlement: Inside The Secret World
        • Credit Repair Explained: Should You Pay For Help?
        • Best Personal Loan Companies And Lenders
        • Online Loan Companies To Borrow From Home
      • Tax

        • Best Tax Software
        • Free Tax Software
        • IRS Tax Refund Calendar
        • Common IRS Questions and Errors
        • Federal Tax Brackets
        • Capital Gains Tax Brackets
        • 401k Contribution Limits
        • IRA Contribution Limits
        • HSA Contribution Limits
  • Forum
  • Search
Home » Investing » Stocks » How To Research Stocks For Beginners

How To Research Stocks For Beginners

Updated: July 21, 2022 By Hannah Rounds

Tweet
Share
Share
Pin
Email
Print

At The College Investor, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners. This doesn’t influence our evaluations or reviews. Our opinions are our own. Any investing information provided on this page is for educational purposes only. The College Investor does not offer investment advisor or brokerage services, nor does it recommend buying or selling particular stocks, securities, or other investments. Learn more here.Advertiser Disclosure

There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We're proud of our content and guidance, and the information we provide is objective, independent, and free.

But we do have to make money to pay our team and keep this website running! Our partners compensate us. TheCollegeInvestor.com has an advertising relationship with some or all of the offers included on this page, which may impact how, where, and in what order products and services may appear. The College Investor does not include all companies or offers available in the marketplace. And our partners can never pay us to guarantee favorable reviews (or even pay for a review of their product to begin with).

For more information and a complete list of our advertising partners, please check out our full Advertising Disclosure. TheCollegeInvestor.com strives to keep its information accurate and up to date. The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products and services are presented without warranty.

how to research stocks

Investors have likely heard that investing in stocks is a smart move for your financial future. But that’s only true if you build an investment portfolio that aligns with your financial goals. 

Unfortunately, the process of investing in stocks seems shrouded in mystery for many beginners. The good news is that researching stocks doesn’t have to be overwhelming. Like all skills, you’ll need to learn the basics to get started.

We’re partnering with our friends at The Motley Fool to explore how to research stocks for beginners. 

Don't Be A Fool. 

Get Better At Picking Stocks

The Motley Fool offers detailed analysis of companies to invest in, monthly stock picks, and model portfolios for you to think about. Team up with Motley Fool's Stock Advisor and build long-term wealth.

GET STARTED HERE
Table of Contents
Figure Out Your Investment Goals
Choose Your Approach
Learn About Investing Metrics
Look Into A Company’s Records
When To Go From Research To Purchase
Using A Tool To Help You
The Bottom Line

Figure Out Your Investment Goals

If you are investing in stocks, it’s a good idea to get specific with your financial goals, which can help you build a portfolio that meets your needs. 

A few reasons why you might want to invest in stocks may include:

  • Becoming financially independent
  • Retiring at a reasonable age
  • Building up the funds for a major purchase that’s at least a decade in the future

Whatever your goals are for your investment portfolio, consider writing them down to help you stay on track. The stock market is an inherent volatile place. With all of the ups and downs, a written down goal can help you stay the course on this rollercoaster ride. 

Plus, you might have separate goals for different parts of your portfolio. For example, you might allocate 90% of your portfolio to long term goals, like retirement. And you might keep 10% of your portfolio to trade and invest.

“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

Warren Buffett

Investor & Billionaire Philanthropist 

Choose Your Approach

As you consider a stock for your portfolio, you’ll need to analyze it. There are two different options. Here’s a look at each. 

Fundamental Analysis

Fundamental analysis examines the underlying value of a business to determine what the stock price should be. 

This type of analysis is the perfect fit for value investors. A value investor acts like a bargain hunter searching for the best deal and looks for bargains in the stock market. Typically, this is a long-term strategy. 

When conducting fundamental analysis, you’ll look at the metrics of a business to determine if the stock price accurately reflects the value of the business. If the analysis finds that a business’s stock price is lower than you believe it should be, that stock could make a good addition to your portfolio. 

Many of the picks from The Motley Fool are based on a fundamental analysis of the company and its competitors to determine if it’s a buy.

Technical Analysis

On the flip side, some investors prefer technical analysis. 

With this type of analysis, you’ll assume that the stock price is an accurate assessment of the underlying business. So instead of looking for deals based on the value of the business, you’ll look for opportunities to buy a stock based on the history of that stock’s price. 

Technical analysis has the goal of rooting out patterns in a stock price. Generally, this is a short-term investment strategy.

The right approach varies based on your goals. If you are looking for long-term stock picks, then fundamental analysis is the preferred approach. A technical analysis can work well for short-term investment goals.

Learn About Investing Metrics

When conducting either a fundamental analysis or a technical analysis, you’ll need to know some of the basic metrics used to evaluate a stock. You can find this information through documents filed with the U.S. Securities and Exchange Commission or use a service like The Motley Fool which aggregates a lot of metrics about a company into a single dashboard. 

Here are a few metrics to understand.

Price-to-Book Ratio

The price-to-book (P/B) ratio compares the value of the company’s assets against its stock price. You can determine a company’s book value by looking for the sum of a company’s total tangible assets minus its total liabilities. If the book value is higher than the stock price, then you could potentially make money, even if the company went bankrupt.

Price-to-Earnings-Growth Ratio

The price-to-earnings-growth (PEG) ratio takes a look at how fast the company is growing in relation to its price. To find this value, you’ll need to divide the P/E ratio by its annualized expected earnings growth rate for the next several years. 

These numbers are the tip of the iceberg for researching stocks. But understanding these numbers is a great place to get started for beginners.

Look Into A Company’s Records

A company’s stock price isn’t the only factor investors should consider. As you build out an investment portfolio, look for businesses that have a solid plan for reliable earnings. 

You should look for businesses with:

  • Proven Management: The right management can make or break a company. Before investing in a stock, make sure you are comfortable with who is running the company. 
  • Industry Trends: Is a stock in a dying industry or a growing one? Look into the general trends of an industry before making a significant investment. 
  • Competitive Advantage: What sets a company apart from the field? The right competitive advantage can secure profits for years to come. 

You can find this information on a company’s website and in the news. Keep an eye out for companies that hit all three of the points above.

When To Go From Research To Purchase

Although researching stocks is important, you’ll need to go from research to purchase at some point. But when? Ultimately, it’s when you feel comfortable with your ability to select a stock that aligns with your financial goals. 

The stock market can be volatile. So, should you invest when the market has a huge swing up or down? 

The answer is that you should keep building your investment portfolio in alignment with your goals. You can find opportunities to invest in a booming market and a falling market. Don’t let the major swings sway you away from your investment plans. 

Remember, adopt a long-term strategy when it comes to investing. This means you will buy and hold your investment for years, not just days or months. So don’t let small price swings scare you.

Using A Tool To Help You

motley fool stock advisor how it works

At some point, you may get frustrated with free options to research stocks, which may prompt you to look for a more, in-depth resource that you pay for. That’s where a service like The Motley Fool comes into play. 

The Motley Fool offers a full suite of research tools to help you find stocks to invest in. They also share their own recommendations of stocks to buy based on their own proprietary research. The cool thing about these picks is that they lay out their thesis and research for you to decide for yourself. Even if you don’t like that single company, learning the insights they are looking at are key.

As you build your portfolio, The Motley Fool also has model portfolios and advanced tools that can help you for the long term. And they have a ton of education content, even live streams during the day. 

If you want to save time in researching stocks, check out The Motley Fool.

The Bottom Line

Researching stocks is an important skill for investors to learn. But as you build your portfolio, consider using stock research tools to streamline your decision-making process. 

One great option is The Motley Fool. The affordable stock research platform could be the perfect place for investors to learn the ins and outs of researching stocks. You can choose to root out all of this information from free sources. But be prepared to commit more time to the process.
Hannah Rounds
Hannah Rounds

Hannah is a wife, mom, and described personal finance geek. She excels with spreadsheets (and puns)! She regularly explores in-depth financial topics and enjoys looking at the latest tools and trends with money.

How To Research Stocks For Beginners

Editor: Claire Tak Reviewed by: Robert Farrington

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.
Comment Policy: We invite readers to respond with questions or comments. Comments may be held for moderation and are subject to approval. Comments are solely the opinions of their authors'. The responses in the comments below are not provided or commissioned by any advertiser. Responses have not been reviewed, approved or otherwise endorsed by any company. It is not anyone's responsibility to ensure all posts and/or questions are answered.
Subscribe
Connect with
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
Notify of

I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree

0 Comments
Inline Feedbacks
View all comments

Primary Sidebar

Investing Resources

Featured Broker Reviews

>  Vanguard (recommended)
>  Fidelity
>  Robinhood
>  TD Ameritrade
>  M1 Finance
>  Schwab

Featured Robo-Advisors

>  Wealthfront (recommended)
>  Betterment
>  WealthSimple
>  Vanguard Digital Advisor

Annual Contribution Limits

  • 401k Contribution And Income Limits
  • IRA Contribution and Income Limits
  • HSA Contribution and Income Limits
  • 529 Plan Contribution Limits

More On Investing

  • Best Online Stock Brokers In 2023
  • Best Brokerage and Investing Bonus Offers In February 2023
  • Best HSA (Health Savings Account) Providers Of 2023
  • 5 Best Investing Apps Of 2023
  • How To Buy Stocks Online For Free
  • The Best Robo-Advisors Of 2023
  • The Best Self-Directed IRA Providers Of 2023
  • The Best Traditional And Roth IRA Accounts Of 2023
  • Comparing The Most Popular Solo 401k Options
  • Top 3 Automatic Investment Apps Of 2023

Footer

Who We Are

The College Investor is an independent, advertising-supported financial media publisher, focusing on news, product reviews, and comparisons.

Connect

  • Contact Us
  • Advertise
  • Press & Media

About

  • About
  • Our Team
  • Podcast
  • Editorial Guidelines
  • How We Make Money
  • Archives

Social

Copyright © 2023 · The College Investor · Privacy Policy ·Terms of Service · DO NOT Sell My Personal Information

wpDiscuz